Banking & IT pull markets lower

Mon, 13 Dec 01:30 pm

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Indian indices continued with their losing streak from the morning session. Stocks from the power and PSU space lead the gains while stocks from the technology and banking space are currently trading in the red.

The BSE-Sensex is down by around 100 points while NSE-Nifty is trading 36 points below the dotted line. BSE-Midcap is trading up by 0.9% while BSE-Smallcap index is trading 1.2% above Friday's close. The rupee is trading at 45.19 to the US dollar.

Power stocks are trading mixed with GVK Power & Infra, Rel Infra and PTC leading the gains. However, Tata Power is trading weak. Government-owned Coal India, the country's largest coal producer, is in talks with Nuclear Power Corporation (NPC) on its plans to enter the atomic power sector through a joint venture (JV).  Coal India would pump in money towards equity with NPC for various nuclear projects. Typically, nuclear projects are developed on a 70:30 debt to equity ratio. Of the Rs 2 trillion investment, the equity requirement is Rs 700 bn and Coal India's investment will be quite crucial. The mining major has yet to take a decision on how much it will contribute to equity.  Apart from equity, Coal India could also provide help in uranium mining, as it has expertise in exploration and mining of open cast and underground coal mines. So far, NPC already has JVs with IOC, Nalco, BHEL, Alstom and NTPC.

Banking stocks are trading mixed with Allahabad Bank and IOB in the green. Kotak Bank and ICICI Bank were however trading weak. According to a recent report by McKinsey & Co., the share of Indian banks in the global banking space is expected to almost double to 2.8% in 2015 from 1.5% in 2009 end. The financial sector is basically the backbone of the Indian economy. For India to sustain 8-9% growth, a strong banking and financial services sector is crucial. The report expects that the revenues of the industry will grow from around US$ 2.9 trillion to almost US$ 4 trillion by the end of FY15. Over the past ten years, revenues of the domestic banks have grown over four times from US$ 12 bn (2001) to US$ 47 bn in 2010. Net profits have been even more impressive. These have increased nearly nine times to US$ 12.1 bn in 2010 from only US$ 1.4 bn in 2001. A consolidation among smaller Indian banks is also possible by then. This is already happening with recent acquisitions by ICICI Bank and SBI's consolidation with its associates. The report also expects at least 5-6 Indian banks to be in the top 100 banking league by 2015.